The Reserve Bank of India's key lending rate was held steady at at 6.5 per cent, RBI Governor Shaktikanta Das announced today. The monetary policy committee took the decision with inflation control remaining a major focus amid expectations of a spike in food prices in coming months and better than expected economic growth.
The RBI monetary policy kept the repo rate, a key lending rate, unchanged for the fifth consecutive time. The repo rate is the rate of interest at which RBI lends to other banks. This means the loan interest rates too are likely to remain unchanged.
RBI also raised the UPI payment limits for hospitals and educational institutions to Rs 5 lakh from Rs 1 lakh per transaction, Mr Das announced.
RBI Governor said the global economy is showing signs of economy and said while the headline inflation receded from last year, it remains above target in many countries and core inflation continues to remain sticky.
Indian economy presents picture of resilience and momentum, Mr Das said, emphasising that Q2 GDP exceeded all forecasts and fiscal consolidation is on course.
External balance remaining eminently manageable, the central banker said, adding that it is the RBI's endeavour to further build on these fundamentals.
Meanwhile, Nifty reached 21,000 for the first time as the RBI's Monetary Policy Committee held the key rate unchanged.
The RBI also maintained its policy stance of "withdrawal of accommodation" to ensure inflation progressively aligns with the committee's target while remaining supportive of economic growth.
The RBI has projected retail inflation at 5.4 per cent for Financial Year 2024, Mr Das said. RBI projected real GDP growth for the 2023-24 fiscal at 7 per cent, with December and March quarter growth estimated at 6.5 per cent and 6 per cent, respectively.
The RBI had raised the repo rate by a total 250 basis points (bps) since May 2022 in efforts to cool surging inflation, which dropped to a four-month low of 4.87% in October, but is expected to remain above the RBI's 4% medium-term target for some time.
India's economy grew 7.6% in the July-September quarter, much faster than the polled median of 6.8% and RBI's estimate of 6.5%, helped by government spending and manufacturing, raising bets that Asia's third-largest economy will outperform its own estimates for the full year.
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